Care and Feeding of your business model – Tony Singarayar
A company must grow to succeed. Its ability to do this is based on the strength of its Business Model. The BM’s “strength” is based on how well it fits certain industry/category conditions and how it compares with competitor BMs. Like an engine, piano or plant, a Business Model must be re-tuned/fed in response to changing conditions, or just like even a powerful engine, a wonderful piano, or a healthy plant, even a strong Business Models will lose its power over time.
Every co has a BM – a growth engine. Some are more powerful than others. Although the BM is the key driver of performance, companies rarely focus on it systematically – instead, most BMs develop by trial and error, responding incrementally over time to customer and industry needs, and changes in the nature and intensity of competition.
If a company innovates its BM by trial and error, it means that the key method of creating value develops unsystematically and is not well understood by management (don’t get defensive, how confident are you that you can describe your Business Model?). Everyone understands a business model until they try to explain one.
Over time, some elements of a BM get more focus and others are neglected – resulting in suboptimal deployment of assets, and missed opportunities to build competitiveness.
BM innovation is a way to accelerate revenue and profit growth by a series of strategic moves, backed by assets and tactics. It needs as much attention as R&D or process improvement. Evidence (and logic) suggest that designing and re-tuning BMs systematically is a far superior approach to trial and error (what else is “fail fast”?).
More to come